Italy Profile Final Feb 2016

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Italy energy profile...

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Energy Profile for Italy Marco Crespi, José Daniel Fasolino February 2016

Content

Introduction Energy Policy Governance Supply Demand Prices Summary: energy balance & indicators, specifics & issues

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| Country Profile Italy

Introduction

Country snapshot in numbers

Indicator

Unit

Year of Estimate

Value

Land area

Thousand sq.km

2014

301.4

Forest area

% of land area

2012

31.6

Population

Millions

2014

60.8

Population density

People per sq.km

2014

201.0

GDP per capita

PPP 2011 $

2014

34,700

Industry value-added

% of GDP

2014

23.5

Inflation

CPI %

2014

0.9

Rents (mineral, oil, coal, gas)

% of GDP

2012

0.2

- 8th country in GPD ranking - a lot of SMEs - strong manufacturing industry 3

| Country Profile Italy

Source: World Bank – World Development Indicators

Introduction

Resources

About 75% of Italy’s energy needs are covered by imports, with small domestic production from gas (9%) and oil (10%).

The consumption of energy constantly grew until 2005; since then a decrease

4

| Country Profile Italy

Source: MISE, Situazione Energetica Nazionale 2014

Introduction

Resources

From under-capacity to over-capacity • Electricity companies mostly reliant on CCGT suffer from high over-capacity in electricity generation; (all the Italian power plants can provide with 130GW, but the real need is about 45/50 GW)

5

| Country Profile Italy

Source: MISE, Situazione Energetica Nazionale 2014 Article on Affari & Finanza, Jan. 11th, 2016

Introduction

Resources

The current energy mix, in particular for electricity, is fairly costly

Italy has high environmental standards, being one of the world’s most energy-efficient countries, with primary energy intensity 14% lower than the European average in 2010 • However, the energy efficiency of the building park in Italy is very low: it is generally old

6

| Country Profile Italy

Source: World Energy Resources – 2013 Survey

Introduction

Wind and Solar resources

7

| Country Profile Italy

Energy Policy

National energy plan: targets

The National Energy Strategy (“Strategia Energetica Nazionale”) has set the choices of energy policies for Italy and established four main targets in medium term (2020), even taking into account the very long term (2050):

8



Competitiveness: to significantly reduce energy cost gaps, bringing energy costs and prices in line with European levels by 2020



Environment: to meet and surpass the European environmental and decarbonisation targets, exceeding the targets set by the Climate-Energy Package (’20-20-20’).



Security: to improve security and independence of energy supply, in both electricity and gas sectors



Growth: to foster a sustainable economic growth.

| Country Profile Italy

Energy Policy

National energy plan - Priorities To achieve the 2020 objectives, the strategy has been structured according to 7 priorities: 1. Energy efficiency, which contributes to the achievement of all energy policy targets, absorbing a substantial portion of expected increases in energy demand 2. Competitive gas market and Gas Hub for Southern Europe, which would help Italy become a country of exchange and transit to northern Europe - This could allow the CCGT fleet to become competitive again 3. Sustainable development of renewable energy to go beyond the 2020 production objectives. 4. Development of electricity infrastructure and the electricity market 5. Restructuring the refining industry and the fuel distribution sector 6. Sustainable production of domestic hydrocarbons (with no impact on environment; no shale oil/gas ) 7. Modernization of the systems governance (shorter time and more efficiency in taking decision) 9

| Country Profile Italy

Energy Policy

National energy plan - Highlights

The results expected by 2020 are as follows: •

Save 15.5 Mtoe of final energy per annum (20 Mtoe of primary energy)



19-20% share of renewable energy in gross final consumption,



Reduction from 86% to 76% of fossil fuels on primary energy consumption



Renewables exceed the levels of gas as energy source in electricity generation, 3538%



Significant reduction of energy costs and a gradual alignment of European wholesale prices



Reduction of greenhouse gas emissions by 21%



Reduction from 84% to 67% of energy dependence from abroad



Positive impact on economic growth thanks to major investments expected in the sector (170-180 Bn€ invested by 2020)

10 | Country Profile Italy

Energy Policy

Renewable Energy

Following European 2020 objectives, Italy must accomplish a quota of 17% of energy from renewables, 20% increase in energy efficiency and 18% reduction of greenhouse gas emissions.

Renewable energy, quota reached in 2014: 17,1%

11 | Country Profile Italy

Source: GSE- Rapporto statistico Energia da fonti rinnovabili 2014

Energy Policy

Renewable Energy Electricity from RE Source

Heating from RE

TWh

Source

Mtoe

Hydro

58.5

Solar

0.180

Wind

15.2

Biogas

0,283

Solar

22.3

Solid biomass+ waste

6,731

Geothermic

5.9

Other

0.163

Bioenergy

18.7

Heat pumps (heating, not conditioning)

2.579

Total

9.934

Total

12 | Country Profile Italy

120.7 (= 10,376 Mtoe)

Source: GSE- Rapporto statistico Energia da fonti rinnovabili 2014

Energy Policy

Renewable Energy

There were two instruments that promoted renewable energies in electricity generation (these two mechanisms are no longer available for new installations) •

Feed-in-Tariff (FiT): as in many other countries, this policy mechanism is designed to accelerate investment in renewable energies by providing a fee which is above retail electricity prices - 20 years of FiT for PV - Decree in 2014 : the amount of those FiT will be payable in longer period.



Green certificates (GCs): all producers and importers of non-renewable have to inject a minimum quota of renewable electricity into the power system every year. - Each GC is conventionally worth 1 MWh of renewable electricity and is valid for three years

In Italy, support schemes for RES are managed by ‘Gestore dei Servizi Energetici’ or GSE (Manager of Electricity services), a state owned company

13 | Country Profile Italy

Energy Policy

Renewable Energy

Grid operators are obliged to give priority access to renewable plants. Favorable tax conditions are currently in place for the promotion of RES for heating •

For example, detractions for installation of solar collectors

District heating and cooling networks are managed at local level •

According to Law 102/2014 about energy efficiency, GSE must assess the feasibility of district heating.

Biofuels should reach the 10% share of fuel consumption by 2020

14 | Country Profile Italy

Energy Policy

Energy Efficiency in N.E.S.

In order to improve the energy efficiency, it is important to keep and strengthen the existing initiative to foster E.E., like the tax detractions, white certificates and incentives (“Conto Termico”). • Better energy performances for new buildings • Tax detractions • Incentives (like “Conto termico”, for private and public properties) • White certificates (for distributors of electricity and gas having 50,000+ clients): 1.7 Mtoe saved in 2015

15 | Country Profile Italy

Energy Policy

Electricity The electricity market in Italy was liberalised following objectives of Directive 96/92/EC after almost 40 years of state nationalisation Distribution and supply activities must be unbundled Generation: • 2014: The main companies involved in electricity generation are Enel (27.2%), Eni (8.3%) and Edison (6.0%). Top10 generate about 60%. • AssoElettrica is the association: 120 companies (90% of the market)

Transmission + dispatching: • Terna – Rete Elettrica Nazionale SpA, is the transmission system operator (TSO). It is the owner of the majority of the transmission grid operation line and holds the concession agreement to operate the system. 16 | Country Profile Italy

Energy Policy

Nuclear

The civil nuclear program was abandoned in 1987, after a referendum. It followed the growing anti-nuclear sentiment of people in the 70s and the Chernobyl accident in 1986. In the 2000s, the government tried to restart the nuclear program, but it renounced after a second referendum in 2011. Italy imports electricity produced to nuclear power in France, Switzerland and Slovenia

17 | Country Profile Italy

Energy Policy

Climate

The domestic GHG emissions has been declining since the second half of the 2000s. Several factors contributed to this fact, such as: •

A switch from oil to natural gas



Increased use of renewable energy sources



Improvement of energy efficiency



The economic crisis

18 | Country Profile Italy

year

MT Co2 equiv.

1990

525.3

1995

538.4

2000

561.8

2005

587.4

2010

516.0

2013

446.6

Source: Eurostat

Governance

Institutions

• The ‘Ministero dello Sviluppo Economico / Settore Energia’ (MiSE) is the Ministry of Economic Development, which manages the security of supply and energy infrastructure, mineral resources, RES, EE, among others • The ‘Autorità per l’energia elettrica e il gas e sistema idrico’ (AEEGSI) is the electricity and gas authority, which sets tariffs, establishes guidelines for production and distribution services, among others • The ‘Gestore dei Mercati Energetici’ (GME) is the Electricity Market Operator, being responsible for the economic management of the electricity market, environmental markets, day ahead markets, among others • The ‘Gestore dei Serivizi Energetici’ (GSE) is the Electricity Service Operator, which is responsible for support of renewable electricity, purchase of electricity from producers and resale in the market, promotion of renewables, among others

19 | Country Profile Italy

Supply

Overview

Total primary energy supply (TPES) and energy independence 200.000

40%

180.000

35%

160.000 30% 140.000 120.000

25%

100.000

20%

80.000

15%

60.000 10% 40.000 20.000

5%

0

0% 1960

1970

1980 Production

20 | Country Profile Italy

1990

2000

TPES

2010

2011

2012

2013

Energy independence

Source: IEA Energy Balances of OECD Countries

Supply

Energy balance sheet Source

MToe

%

Trend

Gas

50.70

30.5

Petroleum

57.30

34.5



Renewable energies

35.34

21.2



Solid fuels

13.47

8.1

9.61

5.8

0

0

Electricity (import- export) Nuclear Total (gross domestic consumpion)

166.43



Comparison: • 2014: Oil+Gas+ Solids represent 73.1% • 2004: Oil+Gas+ Solids represent 87.3% 21 | Country Profile Italy

Source: Autorità per Energia Elettrica Gas e Sistema idrico

Supply

Electricity Electricity consumption in TWh

Electricity production by source Hydro

400 8% 350

2% 19%

Coal

5%

300

Oil

5% 250 6%

200

Gas

150

Biomass and waste

100

Wind 17%

50

Solar 0 1970

1990

2010

2012

2014

38%

Geothermal

Production of electricity from RES: 2013: 38.6% - 2014: 43.1% 22 | Country Profile Italy

Source: ENERDATA – Global Energy & CO2 Data

Supply

Electricity Power capacity by source

Electricity production by source

Hydro 1% 14%

8%

18%

Coal Oil

7%

6%

Hydro

2% 19%

Oil

5%

Gas

6%

2% Biomass and waste Wind 7% Solar 45%

23 |

Coal

5%

Gas Biomass and waste Wind

17%

Geothermal

Solar 38%

Geothermal

Production of electricity from RES: 2013: 38.6% - 2014: 43.1% Country Profile Italy Source: ENERDATA – Global Energy & CO2 Data

Supply

Interconnectors (electricity)

Italy has interconnection capacity with 6 countries: Switzerland, France, Greece, Slovenia, Austria and Malta Italian electricity imports represented more about 15% of total consumption in 2014 (46 TWh ; 100%=309TWh) Terna is developing projects for new submarine interconnections in the Balkan area • A new connection with Montenegro will represent the first 1,000 MW electricity bridge with the Balkan area • Several studies are being developed for new submarine interconnections with Tunisia, Croatia and Albania

24 | Country Profile Italy

Supply

Gas

Gas: import covers about 90% of italian gas need. Algeria (12%), Russia (46%), Libya (11%) and Netherlands (7%) are the main sources of gas import from ducts (2014). LNG is shipped from Qatar (7%); Italy has 3 regassification units. The trend is a slow decline in the use of the gas: the peak was reached in 2005 (71 Mtoe, while in 2014 it was 50,7 Mtoe) The main italian producer is ENI (85%). Italy has nearly 14 BCM of gas storage capacity

Source: MISE: Situazione energetica nazionale 2014 25 | Country Profile Italy

Supply

Interconnectors (gas)

May Italy become the gas hub for the southern Europe? “South stream” and “Galsi” (Algeria-Sardinia) projects have been delayed (canceled ?). Trans Adriatic Pipeline (TAP): Greece- Albania- Italy (from Caspian Sea) is expected to start in 2016 and should be completed in 2020 Snam Rete is investing in the Po Valley gas infrastructures and developing a reverse flow project towards north-east. • This would make possible to export gas to France and Switzerland

Snam Rete is also developing a South-North project to increase flexibility

26 | Country Profile Italy

Supply

Oil

The consumption of oil is decreasing and will keep decreasing: in 2000 it covered 49.5% of need (92.03 MToe ), now it is 35% (57.27 MToe) Crude oil: exporter countries: • Azerbaijan (17.1%) • Russia (15.9%) • Iraq (11.8%) • Saudi Arabia (10.9%) • Kazakhstan (8,3%) • Libya (7.8%) Others: 29.2% 27 | Country Profile Italy

Source: Ministero Sviluppo Economico (graph. : Ministero Sviluppo Economico, elaborazione fabiodiscolzi.com)

Demand

Overview

Energy consumption, Mtoe

Energy consumption by sector

140 2% 14%

120

25% 100

Industry Transport

80

Residential

60

Services

40

Agriculture 27%

20

32% 0 1960 1970 1980 1990 2000 2010 2011 2012

28 | Country Profile Italy

Source: IEA Energy Balances of OECD Countries

Demand

Industry Electricity and natural gas are the main consumption sources Industry energy consumption by source 9%

2%

9%

11%

Coal Oil Gas Electricity Heat

37%

Biofuels & waste

32%

29 | Country Profile Italy

Source: IEA Energy Balances of OECD Countries

Demand

Transport Oil is the most important source of consumption in the transport sector Energy consumption characterization in transport 3%

4%

2%

Oil Gas Electricity Biofuel and waste

91% 30 | Country Profile Italy

Source: IEA Energy Balances of OECD Countries

Demand

Services Electricity and gas are the main consumptions in the service sector Service sector energy characterization 0% 1%

4%

Oil Gas 49%

Electricity 46%

Biofuel and waste Heat

31 | Country Profile Italy

Source: IEA Energy Balances of OECD Countries

Demand

Residential Electricity and gas are the main consumption sources Energy consumption characterization in residential 2% 12%

0%

9%

Solids Oil 19%

Gas Electricity Biofuel and waste Heat

58%

32 | Country Profile Italy

Source: IEA Energy Balances of OECD Countries

Prices

National Energy Bill (B€)

Fuel

Industry

Transport

Households & Services

Total

Coal

0

-

-

0

Oil

2

60

7

69

Gas

4

-

19

23

Electricity

28

-

35

63

Heat

2

-

1

3

Total

35

60

63

158

33 | Country Profile Italy

Prices

Electricity prices w.r.t. neighbours

Constant price in US$cents05 of electricity in industry (taxes incl.) Unit

1980

2013

2014

Unit

1980

2013

2014

Belgium

USc05/kWh

11.1

10.1

9.9

Z-score

0.1

0.3

0.1

France

USc05/kWh

11.5

10.0

9.9

Z-score

0.2

0.3

0.1

Germany

USc05/kWh

11.5

13.9

14.8

Z-score

0.2

1.2

1.2

Italy

USc05/kWh

14.6

25.6

25.9

Z-score

0.8

4.0

3.8

Spain

USc05/kWh

9,92

13,09

14,26

Z-score

-0,12

1,05

1,09

Switzerland

USc05/kWh

13.4

9.5

9.5

Z-score

0.6

0.2

0.0

34 | Country Profile Italy

Source: ENERDATA – Global Energy & CO2 Data

Prices

Gas prices w.r.t. neighbours

Constant price in US$05 of natural gas in industry (taxes incl.) GCV Unit

1980

2013

2014

Unit

1980

2013

2014

Belgium

USc05/kWh

2.5

3.9

3.3

Z-score

-0.4

0.1

-0.2

France

USc05/kWh

2.9

4.3

4.1

Z-score

-0.3

0.4

0.3

Germany

USc05/kWh

2.7

4.1

3.8

Z-score

-0.3

0.2

0.2

Italy

USc05/kWh

3.3

4.2

4.0

Z-score

-0.1

0.3

0.3

Spain

USc05/kWh

4,26

3,56

3,55

Z-score

0,15

-0,03

-0,01

Switzerland

USc05/kWh

5.0

5.2

5.2

Z-score

0.4

0.8

1.0

35 | Country Profile Italy

Source: ENERDATA – Global Energy & CO2 Data

Prices

Taxes

Oil: 55% taxes in end-consumer prices • 57% of taxes for the transport sector (56% on diesel and 60% on gasoline) • 15% for industry • 44% for household and services

Electricity: 38% • 40% of taxes for the industry • 37% for household and services

Gas: 27% tax • 21% of taxes for the industry • 28% for household and services

Renewable electricity fees: A3 component • Up to 6.51 c€/kWh

36 | Country Profile Italy

Source: ENERDATA – Energy and tax bill

Summary

Simplified Energy Balance

Mtoe Primary Production

1997

2000

2005

2009

2010

2011

2012

2013

2014

33.37

31.04

29.43

30.31

33.89

35.47

37.54

43,82

45,04

Imports

161.11

181.56

197.39

175.44

185.26

175.73

168.63

154,11

143.79

Exports

21.15

21.60

29.67

27.08

30.11

27.57

30.48

24,96

21.26

Stock changes

-1.08

5.10

-0.63

-1.67

1,26

-0.58

-0.62

-0.02

1.15

Gross inland consumption

174.41

185.90

197.77

180.34

187.79

184.20

176.31

172.99

166.43

Available for final consumption

127.66

134.84

146.59

132.71

138.58

134.90

127.86

126.59

120.80

• Industry

37.21

40.18

41.06

29.26

32,15

32.66

30.19

28.18

27.71

• Transport

38.87

41.51

43.96

42.50

42.42

42.47

38.56

37.82

39.09

• Residential + service

37.53

39.70

47.06

46.37

49.13

46.45

46.89

49.51

44.23

3.20

3.23

3.40

3.29

3.04

3.01

2.78

2.74

2.69

8.445

7.50

7.68

7.22

8,39

6.90

6.49

5.91

4.78

2.40

2.70

3.42

3.37

3.47

3.41

2.96

2.43

2.30

Efficiency of transformation

73,2%

72,5%

74.1%

73.5%

73.7%

73.2%

72.5%

73.1%

72.5%

Energy independence

19.1%

16.7%

14.9%

16.8%

18,0%

19.2%

21.3%

25.3%

27.0%

• Agriculture • Non-energy uses • Bunkers

37 | Country Profile Italy

Source: Ministero dello Sviluppo Economico – DGSAIE – Statistiche e analisi energetiche e minerarie

Country Comparison on Energy use from 1960 to 2012 (ktoe)

38 | Country Profile Italy

Summary

Extended Energy Balance

ktoe Primary Production

Solids

Oil

RES

Gas

Biomass

Nuclear

Electricity Total

51

5,629

7,046

11,487

7,641

0

0

31,885

Imports

15,978

85,421

55,451

0

2,807

0

3,905

163,562

Exports

-213

-30,379

-114

0

-56

0

-198

-30,959

0

-5,568

0

0

0

0

0

-5,568

483

443

-1,045

0

30

0

0

-89

Gross inland consumption

16,299

55,547

61,338

11,487

10,421

0

3,707

158,800

Available for consumption

2,608

49,502

35,811

273

5,499

0

25,520

122,645

Industry

2,464

3,268

9,040

10

465

0

10,348

28,178

Transport

0

33,170

886

0

1,368

0

925

36,349

Services

0

633

7,274

98

46

0

7,764

31,325

Residential

3

2,809

18,111

117

3,619

0

5,973

15,930

Agriculture

0

1,961

129

18

2

0

501

2,625

141

7,369

371

0

0

0

0

7,880

Bunkers Stock changes

Non-energy uses

39 | Country Profile Italy

Source: IEA Energy Balances of OECD Countries

Summary

Specifics

Some controversial matters about big infrastructures: • Electric interconnector from Montenegro • Gas duct from Algeria (GALSI project) The “Unlock Italy” make the drilling for oil and gas easier. A referendum will be held in April, in order to limit the the duration of drilling concessions.

40 | Country Profile Italy

Summary

Issues

Source of energy: • No nuclear energy • Sistem overcapacity: a lot of CCGT plants will be closed or be run at minumum load • There is a continuous decreasing consumption of oil; its importance is being taken by gas • Renewables are becoming more and more important, even if the “boom” of the last years should not be experineced again. • Italy should not become the european hub for gas. Energy efficiency: italy is promoting energy efficiency through a lot of initiative, like White Certificates. Please note that at local lever the situation differs from place to place, especially about the Building Code. 41 | Country Profile Italy

Sources

Macroeconomic indicators: http://databank.worldbank.org Energy Balances: Eurostat, IEA, Enerdata Energy Prices: Eurostat, Enerdata Country Report, Global Energy Research (Enerdata) Country Report, www.reegle.info European Commission: Progress towards completing the IEM World Energy Council: World Energy Resources 2013 Survey American Council for an Energy Efficiency Economy: “2014 International Energy Efficiency Scorecard”

42 | Country Profile Italy

Sources (in Italian)

Ministero dello Sviluppo economico: “Bilancio Energetico Nazionale” GSE: “Rapporto statistico - Energia da fonti rinnovabili 2014” (Dec. 2015). Ministero dello Sviluppo Economico: “Situazione energetica nazionale nel 2014”, (July 2015) Ministero dello Sviluppo Economico: “Strategia energetica Nazionale” (Mar.2013)

43 | Country Profile Italy

Thank you For more information please contact: [email protected] [email protected] [email protected] [email protected]

44 | Country Profile France

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